''The Canadian Wheat Board's Last Stand?''
by Anna Kirkpatrick
The Dominion, November 30, 2006
(read in Le Frigo Vert: Electronic Newsletter, December 2006)
Globally, the grain industry is dominated by transnational corporations
with four companies controlling more than 70 per cent of international
grain market.
On October 25, Inside US Trade, an American business magazine,
published a
report that could have serious implications for Canadian grain farmers.
The Report of Technical Task Force on Implementing Marketing Choice for
Wheat and Barley was first released not to farmers or the Canadian
public,
but to this US journal. According to Stewart Wells, President of the
National Farmers Union (NFU), that reveals something about the report's
underlying aims. "That should provide some indication of whose
interests
are being served with this report," he said. Essentially, the report
argues for eliminating the present Canadian Wheat Board (CWB) and
replacing it with the so-called CWB II, a move that many argue will
threaten the viability of small wheat farmers in Canada and further
increase the profitability of Big Agribusiness.
The Canadian Wheat Board was established on the initiative of farmers.
At the beginning of the last century, farmers felt helpless at the hands
of middlemen and market speculators, observing, among other things, an
inordinate difference between the price they received and the eventual
selling price. In response to this situation, the pre-cursor to the CWB
was established in 1917. The Canadian Wheat Board Act was passed in
1935.
The CWB has existed more or less in its present state for 70 years.
Today, the CWB is collectively owned by farmers and receives financial
backing from the federal government (including low interest rates and
guaranteed payments). The taskforce that wrote the report proposes to
scrap the current board, which is composed of 15 members elected by
farmers and five government representatives, and replace it with a
board
appointed entirely by the federal government. The move away from a
farmer-controlled board is troubling for NFU's Wells. "Buried in the
platitudes is the underlying theme of absolute government control of
the
Canadian Wheat Board," he said The report also suggests that the Board
should be re-structured to a share-capital company, with shares
available
for sale to any interested buyer. The CWB argues that this move will
shift
control of the Board away from farmers and into the hands of
shareholders.
According to a statement issued by the CWB on November 6, "In the
share-capital model, farmers are inevitably forced into the position of
being a supplier instead of an owner."
Currently, the CWB has the exclusive right to market Western Canadian
wheat and barley (with the minor exception of barley grown for feed).
This function, referred to as a 'single-desk,' means that one
organization represents all Western Canadian barley and wheat farmers.
According to the NFU, "The CWB's single-desk selling advantage enables
it
to extract higher prices in world markets and to price-discriminate
between buyers," thus getting more money for farmers. The NFU estimates
that this advantage results in annual premiums of $265 million for
wheat
and $72 million for barley. The taskforce's report recommends that this
feature be done away with, allowing other (mainly transnational)
companies to compete. Agriculture Minister Chuck Strahl, who appointed
the taskforce but did not sit on it himself, is in agreement with the
recommendations and endorses "freedom of choice for marketing of wheat
and barley and voluntary participation in the CWB." But various critics
have pointed out that the CWB cannot be both strong and voluntary.
Jan Slomp farms near Rimbey in central Alberta; she is one prairie
farmer
concerned about what will happen if the single-desk is abolished.
According to Slomp, in an environment of so-called 'market choice,'
"the
CWB cannot function. It does not have elevators or terminals, like all
the
other grain companies do. So in order to do business it would have to
use
facilities that were owned by other grain companies, making it
impossible
to capture a price higher than the price offered by these companies."
As
the CWB notes in its response to the taskforce report: "In the absence
of
the single-desk, a 'strong and profitable CWB' is a myth. In the
absence
of a single-desk there is no viable alternative for the Canadian grain
industry other than that which exists in the rest of the world."
Globally, the grain industry is dominated by transnational corporations
with four companies controlling more than 70 per cent of international
grain market. In a report published last year, the NFU notes that while
corporate profits are on the increase, farmers are earning less:
"?overall, Canadian farmers have not earned a single dollar of profits
from the markets since 1984. Over the same period, agribusiness has
accumulated profits almost certainly reaching into the trillions."
When asked who stands to benefit from proposed changes to the CWB,
Slomp
is brief and to the point. She names the four biggest players in the
global grain trade: Cargill, Bunge, ADM (Archer Daniels Midland) and
Louis
Dreyfus. In its statement, the CWB warns that removing its single-desk
function would have a crippling effect on Canadian farmers, while
boosting
the power of transnationals. Control would fall to companies whose
"focus
is quite naturally on the most profitable way to make the sale?[and
who]
are necessarily indifferent to whether the grain needed for the sale
comes
from Argentina, America or Ukraine."
Those who support the re-structuring of the CWB argue that the board is
obsolete and not financially viable. Various economists and think tanks
(such as the George Morris Centre, the Frontier Centre for Public
Policy
and the National Citizens Coalition) have suggested that farmers would
have lower costs and higher returns if the CWB were disbanded. The NFU
disagrees. After tallying the benefits provided by the CWB (including
price premiums, low freight costs and efforts to prevent the
introduction
of GM wheat) the NFU estimates that the Board saves farmers over $800
million every year.
Despite serious opposition from farmers, Minister Strahl is pushing
ahead.
According to Strahl, "We have promised to implement a system of
marketing
choice, and we are moving in that direction." Until recently, Strahl
dismissed the notion of farmer plebiscites to determine the future of
the
CWB, even though such votes are required by law under the Canadian
Wheat
Board Act. But already, the resistance of farmers has met with some
success. According to Stewart Wells, while there is still no commitment
to
hold a wheat plebiscite, "Farmers have scored a major victory by
forcing
the federal government to conduct a plebiscite on barley." Much will
depend on how the plebiscite is worded, however. Wells, for one, is not
optimistic: "We don't have much confidence this government will run a
fair
vote on this plebiscite."
For Jan Slomp a future without the CWB is a grim prospect. "Many
farmers
have indicated to quit producing after the single-desk is gone," she
said.
"It does not make sense to keep trying if all the farmer market power
is
gone."
* * *
Le Frigo Vert: Electronic Newsletter, December 2006
This once-monthly digest consists of a compendium of Frigo collective
news, social justice events, calls to action, healthy recipes, and
articles related to Le Frigo Vert's social justice and anti-oppression
mandate.
Accueil 